By LIAM DANN
New Zealand's richest man, Graeme Hart, has nailed another huge deal.
His Australian food company, Burns Philp, has offloaded a $2.1 billion chunk of its global food business to Associated British Foods.
Hart paid $300 million for Burns Philp when he bought it in 1997.
The latest deal - which includes
all of Burns Philp's international yeast, bakery ingredients and its US herbs and spices businesses - will alleviate the huge debt the company has grappled with since its $2.2 billion takeover of Goodman Fielder last year.
Hart said about 25 per cent of the funds from the deal would help to pay off debt. Burns Philp has a net debt of $2.9 billion.
"So we'll have a billion-and-a-half in cash sitting in the bank and that suits us fine," he said.
The company will now start looking worldwide for acquisition opportunities, then pursue them.
While the deal would lighten the load, it had not been driven by the need to pay off debt.
"It [debt] gets far too much focus. The media look at it and go: that's a lot of leverage," said Hart.
"Do you think 20 banks are going to give us $2.5 billion if they thought it was a lot?"
Burns Philp had flagged the sale of its US herbs business, Tones, two years ago. A sale process was completed, with Associated ending up as preferred bidder.
"As they were conducting their due diligence, we got talking yeast and this transaction evolved," Hart said. "It's a case of great timing for both companies."
Within months of buying Burns Philp in 1997, Hart's shares were almost worthless and the company was in the hands of bankers.
But he traded his way out, building the company to a size that had commentators declaring him New Zealand's first billionaire.
Hart said Burns Philp remained committed to Goodman's Australasian businesses.
"The remaining businesses we have are very strong ... so we're in great shape."
